Dashing the hopes of the scam-tainted Satyam founder's son's company Maytas Infra Ltd, the Andhra Pradesh government today scrapped the Rs12,100 crore Hyderabad Metro Rail Project, which had earlier been awarded to Maytas.

Announcing this to the media today, municipal administration and urban development minister Anam Ramanaryana Reddy said that the government decided to cancel the project as the company had failed to achieve financial closure even three months after the initial March deadline.

The company bagged the project last year by offering a negative grant to the government. It also rejected the viability gap funding extended by the government and instead offered to give about Rs30,000 crore to the government over a period of 30 years. But that was before the scam broke open at its parent company, Satyam Computer Services Ltd.

The troubled company has been desperately trying to hang on to the prestigious project, even trying to rope in Anil Ambani-controlled Reliance Infra as a partner. However, its overtures to the latter seem to have been rejected. (See: Maytas Infra gets bailout from lenders)

Adding insult to injury, the minister made it clear that the government would hang on to the Rs71 crore that the company has paid to the government in phases and not return it. He added that the government would still take up the project, and would announce a detailed plan on it on 13 July.

''For now the project is scrapped. A consortium led by Maytas Infra which was awarded the contract is unable to start the project for various reasons. Other consortia are not interested in taking up the project, so we are terminating the contract with Maytas and scrapping the project for the time being. All agreements between Maytas and government now stand cancelled,'' the minister said.

Maytas Infra is the family firm of disgraced Satyam founder B Ramalinga Raju, and is headed by his son B Teja Raju.